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  • 1. An assignment on Aspect of Contracts and Negligence’s for the Business Submitted: Name: ID: Submitted To: Date of Submission 1
  • 2. Executive Summary In the given scenarios, TAM’s college has appointed agencies that will look after their legal side of the institution and also an agency to market and promote TAM’s college to the mass to become one of the best educational institutes in the Great Britain. During the contract period NAMS marketing firm has broken their initial promise and TAM’s college authority has taken legal steps against them. Though the management of TAM;s college has ordered the staffs to wear proper uniform during duty, but the supervisors were inattentive to the instructions and sent off an guard without proper uniform to the duty and lead him to an accident. As the guard did not wear proper uniform the management of TAM’s college denied the claim of the guard showing that he did not follow the policies of the institute and faced legal actions from the victim’s family. 2
  • 3. Table of Contents Executive Summary ........................................................................................................ 2 Task 1 ............................................................................................................................. 4 1.1 Essential Elements of a Valid Contract .................................................................. 4 1.2 The Impact of Different types of Contract .............................................................. 5 1.3 Analysis of Terms in Contracts .............................................................................. 6 Task 2 ............................................................................................................................. 7 2.1 Application of the Elements of Contract ................................................................. 7 2.2 Application of the Law ............................................................................................ 8 2.3 Evaluation of the Effect of Different Terms ............................................................ 9 Task 3 ........................................................................................................................... 11 3.1 Contrasting Liability in Tort with Contractual Liability ........................................... 11 3.2 The Nature of Liability in Negligence ................................................................... 11 3.3 Vicarious Liability in business .............................................................................. 11 Task 4 ........................................................................................................................... 13 4.1 Application of the Tort of Negligence and Defences ............................................ 13 4.2 Application of Vicarious Liability........................................................................... 14 Conclusion .................................................................................................................... 16 References .................................................................................................................... 17 3
  • 4. Task 1 1.1 Essential Elements of a Valid Contract There are eight elements of valid contract. These elements are important in order to make a valid contract. The essential elements of a valid contract are given below. 1. Offer and Acceptance 2. Lawful Consideration Capabilities of Parties 3. Free Consent 4. Writing and Registration 5. Formal Relation 6. Certainty 7. Possibility of Performance 8. Enforceable by Law Figure: Essential Elements of Valid Contract 1. Offer and Acceptance: In order to form valid contract an offer has to be made and it is the first step towards an agreement (Horton, C., 2012). Followed by the offer the interested party has to accept upon the offer and thus form an agreement. 2. Lawful Consideration: An agreement lead to a contract when the person accepting the offer takes decision based on some lawful consideration (Hampton, J. 1976) 3. Free Consent: To form a valid contract the two parties must provide their free consent, otherwise the contract will be considered as a void contract and it will be avoidable (Hampton, J. 1976). 4
  • 5. 4. Writing and Registration: A formal contract has to be in written and registered by the government authority to make the contract valid (Myer, J. W. 1978). 5. Formal Relation: Formal relation has to be present in order to make a valid contract (Hampton, J. 1976). Any act of informal agreement cannot be considered as a formal contract, for example; a person gave promise to another person that he would give him some money but he did not mention any time. So, it will not be count as a contract because there was no formal relation present. 6. Certainty: Each and every element of a contract has to be certain so that each party is able to realize the issues regarding the contract (Horton, C., 2012). 7. Possibility of Performance: A valid contract should have the possibility of performance because if the contract cannot perform the issues then it will not be considered as a contract (Myer, J. W. 1978). 8. Enforceable by Law: A valid contract is enforceable by law otherwise it will be considered as the event of breach of contract (Horton, C., 2012). 1.2 The Impact of Different Types of Contract There are many types of contracts that are;  Contract under Seal: The traditional method of making a contract valid is the sealing of the legal document that is enforceable (Horton, C., 2012). It is important to stamp the document with various seals and the both parties are liable to accept the results of the agreement after it is sealed.  Express Contract: Express contract is one of the many types of contracts. It is either in the formation of a written document or it can even be in the oral form which is accepted to the governing body that focuses on the consent to terms (Myer, J. W. 1978).  Implied Contact: To form a valid contract free consent is important of the both parties. But in case of implied contract it will be considered as a valid contract if one party does not give free consent (Hampton, J. 1976). This type of contracts occurs when a person pretends to own any assets and sell it. For example; if a 5
  • 6. servant sells his or her owner’s stuffs as if s/he is the owner of the assets without the free consent of the owner then it will be considered as an implied contract.  Executed Contact: It is a type of contract where both parties execute the terms and conditions of the contracts before they go in to a contract and there is nothing to be worked out by each party (Myer, J. W. 1978). The performance of the parties signifies that there is no contract, and then it is an executed contract.  Unconscionable Contact: It is a contract in which both parties are concern about the contract but one party gets the higher advantages than the other (Hampton, J. 1976). This type contracts are unenforceable because there is lack of free consent from one of the party. 1.3 Analysis of Terms in Contracts There are many objectives of contracts. It is important for the parties to understand the different types of contracts, terms, elements, and clues which not only helps the parties to comply with the contract but also helps to diminish contract management costs (Okeke, C.N. 1988). Major changes are necessary to align the emplacement agreement. The TAM’s college is trying to become one of the best educational institutes in UK. So, they are trying to capture the attention and hiring agents and legal advisors to help them to the quest. In order to become the best educational institute in UK they are going into contracts with several agencies for their marketing purposes and solving the legal issues. To form a valid contract there should be some differences among the exchanging of terms, considerations and bargaining of the parties and TAM’s is trying to bring the differences. 6
  • 7. Task 2 2.1 Application of the Elements of Contract A valid contract is enforceable by law. The parties must honor the terms and conditions of the contract and if one party or the other party differs from the promise of agreement then the party honoring the agreement can go to court and take legal actions (Roberts, M. & Zahay, D. 2012). The basic elements of the contract with NAMS are: Offer Acceptance Free consent Formal relation Valid contract is enforceable by law NAMS gave offers for intensive marketing for one month to make TAM’s reputation high and help them to become one of the best educational institutes in the UK. In a formal valid contract offer is the initiation of a contract with another party and forms a business relationship. In order to make a valid contract the terms and conditions of the contract has to be accepted by the parties participating in a contract, otherwise it will be considered as a void contract. TAM’s college has accepted the NAMS marketing offer for one month and paid the initial fee of £2500 and entered in to a valid contract. Both the parties in the 7
  • 8. contract entered into the contract with free consent and a written documentation turned the contract in a formal relation. Valid contract is enforceable by law. The management of TAM’s college has the authority and proof that NAMS has breached the contract agreement and the initial term. NAMS were unable to provide marketing assistance to TAM’s college so that the TAM’s college has taken legal actions against NAMS. 2.2 Application of the Law When two parties make a contract then there are some essential elements that need to be considered in order to make a valid contract. The parties involved in contract give confidence and encourage the terms and conditions of a contract (Roberts, M. & Zahay, D. 2012). Opinion of the parties may differ from the agreement which was supposed to be in use as just a pre-declaration of the valid contract and consequently not part of the contract (DiMatteo, L. A. 1998). Parties to an indenture follow only its terms, not by any unimportant statements that may not be completed. To form a valid contract certain requirements are needed. Such as; Collateral Contracts •It is one kind of contract in which the terms and conditions are normally written as the basis of the contract. Where the statement have been created and intended as to make sure to induce the main contract. Judges have been organized to find a security convention someplace to make the contract valid and beneficial for the parties agreed upon the contract. Contract Includes Conditions and Warranties •The more imperative terms are describing "Circumstances", the smaller amount significant terms are called "Warranties”. These parts are so important that in absence of any one or supplementary of the parties would not go into the indenture. As a result, to construct a circumstance falsely, or to breach a condition, is viewed so dangerously and considered as a mistreated agreement. The indenture itself provides motivation to the both parties. Figure: Requirements of a Valid Contract 8
  • 9. Exclusion of responsibility of the terms: Contract can be made where other organizations are probable to have a term in the agreement which excludes one of the party’s accountability that may go wrong in the presentation of the agreement or restrictions on that accountability. It is called a “Prohibiting Paragraph” or a release clause (DiMatteo, L. A. 1998). Based on the scenario, a prohibiting clause from “responsibility” for spoil done to the TAM’s marketing campaign by NAMS might be included in the agreement between NAMS and TAM’s college. 2.3 Evaluation of the Effect of Different Terms There are many terms included in the contracts and some of them are for formalities. These are formation of contract and it is necessary to be in a written and the seal is needed to establish it (Okeke, C.N. 1988). There are many types of law and it needs various types of formalities. The Patrol Evidences Rule Establishing Implied Terms Various Types of Conditions •It is a role that includes oral evidences. Oral evidence may not be adduced to adjoin to say that the opposite to or shown to be a bogus written article (Okeke, C.N. 1988). The contract always tries to the law of confirmation and applies not only to contracts but also all kinds of credentials. •There are some situations in which contracts need to establish the implied terms formally and it is made from one person to another person (Roberts, M. & Zahay, D. 2012). •Various types of conditions may affect the contract and technical judiciousness of the word is a good amount of central grouping of contractual expression (Okeke, C.N. 1988). The preparation for committing a breach of circumstance at universal law is refutation and indemnity. Figure: Effects of Different Terms 9
  • 10. The Up-To-The-Minute Observation The violation of a circumstance allows the above misgiving gathering to reckless spending the indenture as rejected, extravagance in the indenture and the parties are enable to compel to the activities and performance (Roberts, M. & Zahay, D. 2012). In the given situation, TAM’s college has agreed to provide the marketing contract to NAMS based on their oral evidence of intense marketing for one month only for £6000 and established an implied contract between TAM’s college and NAMS. 10
  • 11. Task 3 3.1 Contrasting Liability in Tort with Contractual Liability Tort and contact liability: The law of tort and of contract is categorized as part of the "Law of Obligations", but the law of tort applies to everyone that it is relevant to, while in the law of contract or in trusts obligation is "Voluntarily Assumed" (DiMatteo, L. A. 1998). Contract damages are based on losses that are expected, while tort damages are compensatory. 3.2 The Nature of Liability in Negligence 1. DUTY: The duty is an obligation of one person to another person, it is created form the social needs, philosophy and various types of religion (DiMatteo, L. A. 1998). The glue of social duty is the threaded that binds humans to one another in groups where preferences are considered inappropriate if they contravene a pre-existing impulse and restore carelessly. 2. Breach of Contract: Breach of contract is most important thing in the contract tort of negligence. It is the behaviour of the people to act as an irresponsible person or party and not performing the contract terms and conditions (DiMatteo, L. A. 1998). This element implies the pre-existence of a standard of proper behaviour to avoid imposing undue risks of harm to people. NAMS has breached the contract when they have stopped the marketing of TAM’s for one week. 3. Cause in Fact: A small number of trouble are more fascinating, with resolution more indefinable then causation (DiMatteo, L. A. 1998). Based on the grounds and performances a person might choose to take steps and avoid doing from amateur dramatics in convinced. 4. Similar Cause: There are some close causes in different forms, the issue of factual causation and the elements just examined and factual connection between protection breach and plaintiff (DiMatteo, L. A. 1998). 3.3 Vicarious Liability in business It is a doctrine of English tort law that imposes strict liability on employers for the wrongdoings of their employees. Generally, an employer will be held liable for any tort 11
  • 12. committed while an employee is conducting their duties (Leibee, B. C. 1976). Vicarious responsibility means that somebody can be detained legally responsible for the inattentive acts of a different individual even despite the fact that someone overcomes no mistake in furtherance of the inattentive or tortuous acts (DiMatteo, L. A. 1998). In the given scenario the management of TAM’s college fell in the doctrine of vicarious liability because the night guard’s family has taken legal actions against the institution. Though the management and the supervisors were warned about the accidents and were also advised to wear protective clothing for the non-teaching staffs to avoid injuries. The staff who got hurt did not maintained the organization’s policy so the management refused to give any compensation to the victim but The TAM’s College are bound to pay the compensation because of the doctrine of vicarious liability. Figure: Vicarious Liability 12
  • 13. Task 4 4.1 Application of the Tort of Negligence and Defences There are some elements of the tort negligence and defences in various business situations, they are given below Tort Negligence Law: It is a form of law in which it is founded and operated in the realm of intentional tort law and the basic purpose of negligence law, is to control and protect the employees from injuries related to their line (Leibee, B. C. 1976). TAM’s college’s non-teaching employees were advised to use protective clothing for their safety and security. Duty of care: An individual may owe a duty of care to ensure that they do not suffer from any unreasonable harm or loss (Leibee, B. C. 1976). If such duty is breached, a legal liability is imposed. TAM’s college employees were warned about the harm and losses that the employees might face. Sources of negligence: Negligence can be defined as failure to take proper care of precaution. It is the unintentional breach of a legal duty causing damage reasonably foreseeable without which the breach would have not occurred. Potential sources of negligence Defence against Negligence Poor selection of activities Assumption of risk Use of faulty equipment Sudden emergency Inadequate protection Hazardous conditions An act of God Figure: Sources of Negligence 13
  • 14. Potential sources of negligence are:  Poor selection of activities: The activities that are beyond the capabilities of individuals or inadequate knowledge of activities are poor selection of activities (Emenike, E.U.I. 1989).  Use of faulty equipment: Another potential source of negligence is the use of faulty equipment which can cause harm (Emenike, E.U.I. 1989).  Inadequate protection: Inadequate protection refers to negligent behaviour on part of the person who is unwilling to wear protective gears (Emenike, E.U.I. 1989).  Hazardous conditions: Hazardous conditions are unforeseen and unavoidable (Emenike, E.U.I. 1989). Defence against Negligence:  Assumption of risk: It is assumed that a person takes measure of the risks when engaging in activity (Emenike, E.U.I. 1989).  Sudden emergency: Any act of immediate action to help the person in danger. Such as, attempt to rescue a person drowning in the water is an act of sudden emergency (Emenike, E.U.I. 1989).  An act of God: The conditions or situations that is uncontrollable by human beings. This assumption is only applicable when adequate safety measures are taken to avoid injuries (Emenike, E.U.I. 1989). 4.2 Application of Vicarious Liability The TAM’s college has enforced the wearing for school’s non-teaching staffs for example guards and labors in order to avoid future accidents. However the senior supervisors have overlooked the warning and he has sent off a night guard on duty without the proper clothing. It is against the company policy. Supervisors has the inherent authority to control over the employees and the supervisors were asked to maintain the right clothing and proper protecting gears of the 14
  • 15. non-teaching staffs (Roberts, M. & Zahay, D. 2012). But in this scenario the supervisors did not follow the instructions and lead one of their staffs to duty without proper clothing. However, vicarious responsibility means that somebody can be detained legally responsible for the inattentive acts of a different individual. In this case the supervisors were inattentive to the instructions and that lead one of the staffs to get hurt. But the authority of the TAM’s college will be found responsible because of vicarious liability doctrine. The authority denied the compensation to the staff because he was not following the rules of the TAM’s college. But under the vicarious liability doctrine no matter how faulty the staffs are the TAM’s authority will be legally responsible for the staff’s wrong doing. 15
  • 16. Conclusion After analysing the scenarios it can be deduced that TAM’s college wanted to become one of the leading institute in the UK and for this reason hired law agencies and marketing firm but the management of TAM’s college faced many difficulties. They have sued against their marketing agency for breaching the contract agreement. An accident with their night guard has made TAM’s college authority liable to pay the compensation to the victim because of the English doctrine “Vicarious Liability”. The victim’s family also sued the TAM’s college because the management have denied the compensation as the guard was not attentive to the institute’s policies. 16
  • 17. References DiMatteo, L. A. 1998. Contract Theory: The Evolution of Contractual Intent. East Lansing: Michigan State Univ. Press. Emenike, E.U.I. (1989). Safety Measures associated with Physical and Health Education Journals. Vol. 3, No. 1, vol. 48, no. 1, pp. 54-82. Hampton, J. 1976. “Legal Responsibilities in Business”, Reston: Prentice Hall. Horton, C., 2012. Legal aspects in Business and Contractual Intent, Journals. Vol. 2, pp. 54-82. Leibee, B. C. (1976). Tort Liability for Injuries to employees. Organisation and Administration. Philadelphia W.B. Saunders Company Journal Of Tort Law ,vol. 18, no. 1, p. 1. Myer, J. W. 1978. “Negligence in Contract and practice”, Delhi: Prentice Hall of India, 3rd edition. Okeke, C.N. (1988). Some Legal aspects of Organizations. A paper presented at a two day conference organized by the National Sports Commission, Enugu, vol. 13, no. 5, pp. 707-719. Roberts, M. & Zahay, D. 2012, Laws and Regulation in practice in Business, 6th Edition, Wadsworth Publishing Co, Belmont, USA. 17